According to an industry expert, the war in Ukraine will make raw materials permanently more expensive and will shake the market in the long run. “In view of all the uncertainties that the beginning of the current decade brings with it, one thing is clear: we are seeing the end of an era of cheap raw materials,” said the head of the Luxembourg-based commodity group Eurasian Resources Group (ERG). ), Benedikt Sobotka, the German Press Agency. “The effects of the pandemic are being exacerbated by the conflict.” International sanctions are contributing to an unprecedented rise in prices, Sobotka said.
The “era of cheap raw materials” is over
The costs of wheat, fertilizer, crude oil, natural gas, aluminum and copper have risen to year-to-date highs and further price fluctuations are inevitable. “In the coming months, many important elements of our daily lives will tend to become more expensive, from bread and coffee to computers and cars, through construction materials, houses and the way we supply electricity to our homes” , emphasized the head of the company. .
According to ERG, it is one of the world’s leading producers of cobalt and copper and one of the most important suppliers of aluminum oxide and iron ore. The group operates mainly in Kazakhstan, Brazil and southern Africa and employs around 75,000 people.
Transformation of the raw materials sector
“The commodity sector is going through what is probably the biggest transformation in years,” Sobotka said. Some changes, while taking more time, are only temporary, such as supply chain issues. Others, however, such as the question of sources of supply or the definition of strategic materials, are more fundamental. “It is no longer possible to choose the best customer, the most profitable route or the cheapest material available,” Sobotka said. “These are the costs of better long-term sustainability and the impact of global geopolitical uncertainty that growers must adapt to.”
The fight would have concrete consequences for automakers, for example, since Ukraine was a major supplier. Russia is critical for many metals such as nickel, which is important for batteries, and aluminum, which is needed for things like bodywork and wheels, as well as palladium and platinum, which are critical components in exhaust systems. of the vehicles.
For copper and cobalt, the existing supply pressure has intensified, especially as global stocks are low. Even before the war started, experts predicted a copper deficit. The industry expert said that increased demand from the switch to renewable energy and electric mobility will continue to boost copper and cobalt prices.